Scooter's Scooters is a large American manufacturer of electric scooters operating out of Boise. Currently, the company produces all of its scooters using a single manufacturing facility, its factory in town. Recently, management has been considering expanding operations to one or two additional factories. The following table presents the manufacturer's monthly short-run average total cost (SRATC) for various levels of production if it operates out of one, two, or three factories. (Note: Q equals the total quantity of scooters produced by all factories.) Number of Factories Q 100 Q=200 1 280 2 380 3 480 440 620 800 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 320 240 240 320 240 Q500 460 380 280 Q = 600 800 620 440 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is s per scooter. Suppose Scooter's Scooters is expecting to produce 100 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Boise. Currently, the company produces all of its scooters using a single manufacturing facility, its factory in town. Recently, management has been considering expanding operations to one or two additional factories. The following table presents the manufacturer's monthly short-run average total cost (SRATC) for various levels of production if it operates out of one, two, or three factories. (Note: Q equals the total quantity of scooters produced by all factories.) Number of Factories Q 100 Q=200 1 280 2 380 3 480 440 620 800 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 320 240 240 320 240 Q500 460 380 280 Q = 600 800 620 440 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is s per scooter. Suppose Scooter's Scooters is expecting to produce 100 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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